Oil-related counters could face renewed downward pressure on the continued slump in crude prices, while banks may be supported by the stronger case for a Fed rate hike next month.
Regional bourses opened flat this morning in Seoul (flat) and Sydney (+0.1%). Tokyo is closed for public holiday.Technically, STI is hovering near its 2,800 support, with topside resistance at 2,880.
Stocks to watch:
*StarHub: 3Q16 results in line; net profit of $86m (-27.6%) was lower on the absence of FV gain (3Q15: $15m). Service revenue slipped to $546.1m (-2.2%), pressured by declining mobile post-paid ARPU (-2.8%) due to lower IDD, local voice and roaming usage, as well as Pay TV on shrinking customer base. Consequently, service EBITDA margin narrowed to 32.8% (3Q15: 33%; 2Q16: 34.7%). Management maintained interim DPS of 5¢ and FY16 guidance and DPS commitment of $0.20. MKE maintains Hold with TP of $3.47.
*CWT: 3Q16 results missed as net profit tumbled to $22.6m (-17%) on an adverse FX swing of $4.5m and reduced associate/JV contributions. Revenue slid 11% to $2.344b on lower commodity trading volume and prices. EBIT margin expanded to 1.7% (+0.2ppt) on unrealised commodity fair value gains and absence of fixed asset write-offs, partially offset by higher admin costs (+11%). NAV/share at $1.394.
*OUE: 3Q16 net profit surged to $107.6m (3Q15: $15m) as revenue leapt 323% to $419.1m, mainly from stronger performance from OUE Twin Peaks and divestment of Crowne Plaza Changi Airport Extension to OUE-HT. Trades at 62% discount to NAV/share of $4.41.
*Super Group: Received voluntary conditional general offer from Dutch tea and coffee company, Jacobs Douwe Egberts, for $1.45b or $1.30/share (34% premium to last close), implying FY16/17E P/E valuation of 31.7x/27.1x. The offer will be formalised upon satisfaction of anti-monopoly laws in China and Philippines, and the offeror intends to take the company private.
*KrisEnergy: Proposed non-renounceable non-underwritten preferential offering of up to $140m in senior secured zero coupon notes due 2024, attached with free detachable warrants on the basis of 93 notes with 837 warrants (exercise price at $0.11 apiece), for every 1,000 shares.
*China Aviation Oil: 3Q16 net profit surged to US$23.2m (+31%), on revenue of US$3.94b (+64.2%), boosted by increased sales in middle distillates (+31.7%) and other oil products (+148%). Gross margin contracted to 0.3% (-0.2ppt) on a shift in sales mix, while bottom line was buttressed by stronger associate contribution of US$19.5m (+100.4%), mainly from increased sales volume and margins at Shanghai Pudong Airport. NAV/share at US$0.746.
*BreadTalk: 3Q16 missed despite a surge in net profit to $3.3m (+108%), partially lifted by increased associate income. Revenue slipped to $157.3m (-2.7%), as weakness in food atrium (-11.4%) and bakery (-0.1%) businesses outweighed improvement of restaurants (+2.4%). EBITDA margin widened 1.4ppt to 13.4% on cost controls and productivity gains from the bakery segment, while net gearing improved to 0.55x from 0.73x in FY15. NAV/share at $0.52.
*Tiong Seng: 3Q16 net profit tumbled to $1.9m (-30%) on softer revenue of $145.9m (-12%), largely dragged by lower contribution from construction (-9%) and property development (-42%) segments. Operating margin narrowed 1.4ppt to 3%, while bottom line was further hit by a jump in finance cost (+51%). NAV/share at $0.5512..
*Chiwayland: Under its fund and asset management segment, Chiwayland will be expanding its AUM of Rmb500m to include fund raising activities from third party investors. In conjunction, group further intends to set up private REITs to hold properties in different real estate asset classes, with a view of subsequent listing.
*Rowsley: Turned around to 3Q16 net profit of $5.4m (3Q15: -$4.2m), mainly from a fair value gain of $7.2m on its stake in Squire Mech. Revenue grew 39.9% to $24.6m from new contributions from its UK hospitality group and Squire Mech. NAV/share at $0.103.
*Next-Gen Satellite: Won suit against Neo Telemedia regarding convertible notes, and will receive principal amount and interest aggregating HK$148.3m
*YuuZoo: In responded to an SGX query on its proposed acquisition of Relativity Holdings, group indicated that Relativity's business is not profitable and the investment amount is likely to be closer towards the US$50m end, instead of US$150m due to listing rule constrains.